What’s the financial planning process for HNWs and families?

What’s the financial planning process for HNWs and families?

22 Sep 2022

As your net worth increases, the complexity of your financial situation grows. This can necessitate finding a reliable wealth manager to help you navigate your increasingly complex world. In fact, a fee-only financial planner can be an excellent choice for high-net-worth individuals and their families. 

There is financial planning—and then there is high-net-worth financial planning in Akron-Canton, Ohio. These professionals work with you on all aspects of your finances, providing unbiased advice based on what’s best for your unique personal situation. This post outlines how it works—alongside a few of its many benefits.

This article explores the following:

  • How HNW financial planning is different
  • Why wealth management is vital for the affluent
  • The advantages of a tax-savvy financial advisor
  • What the financial planning process involves
  • Ways in which a fiduciary benefits investors

What Is High-Net-Worth Financial Planning?

We should start simply: High net worth financial planning is the process of helping affluent individuals and families manage their finances in a way that minimizes taxes and maximizes returns. It has a few aspects in common with similar services for the non-wealthy, but for multiple reasons (including the scale of transactions, at times) it involves greater complexity.

Normally the process begins with the creation of a financial plan; a sort of road map (and itinerary) to your long-term financial goals. Although “plan” is used here as a singular term, we believe clients’ best results derive from a comprehensive approach that covers multiple aspects of your financial life.

For example, a typical financial plan may include things like estate planning, tax planning, retirement planning, and other areas of special interest, such as full-cycle investment strategies and risk management. Particularly with regard to limiting your tax liability (or how much you are assessed as owing), the more we plan our efforts in one area to complement those in another, the greater our probability of significant savings. 

Step 1: Identifying Your Goals

The first step in creating your financial plan is the identification of your goals. You may have a specific objective(s) in mind or you may simply want to make sure that you are on track for the most comfortable retirement possible. 

Three basic steps are integral to this process:

  • Clarifying your short-term vs your long-term objectives
  • Identifying any barriers preventing you from achieving those goals (such as debts)
  • Assessing the timeframe within which each objective must be achieved

Step 2: Strategizing Your Plan

Once you have identified your goals, it is time to consider your options for reaching them. This may include weighing the pros and cons of creating a budget, performing a cash flow analysis, structuring a retirement plan, preparing your legacy via an estate plan, and strategizing your taxes long-term. Seeking the input of vetted, experienced professionals for this step could save you time in the long run.


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Step 3: Taking Inventory

The next phase of the process is reviewing your current financial situation. In other words, you need to identify your short-term and long-term goals. Based upon what you learned in previous steps, you may opt to evaluate your current investments, review your insurance coverage, and review your estate plan, as well. 

The information gathered during this stage can help define many important procedural guidelines for later steps. For instance, it may clarify how much of your assets should be invested in stocks or bonds or what kind of life insurance coverage is needed for you and your family members. How much risk you are willing to take when investing money merits consideration here, as well. A registered investment advisor can help you with informed decision-making.

Step 4: Learning Your Wealth

Once you have a financial plan in place, it is time to get to know your money. There are numerous ways to do this, but one of the most popular is by using a daily budget sheet. Despite how it may sound, this is not an accounting tool. Instead, it helps you make more optimal choices with your money each day. 

That is a crucial step if you want to both keep and build wealth. It is also something you should update regularly as your life circumstances change (due to a birth, divorce, death, or so on). A typical daily budget sheet may look like this:

  • Name:
  • Date:
  • Income (before taxes): How much you receive each month.
  • Expenses (fixed): A summary of your recurring monthly costs; health insurance premiums, homeowners’ association dues, and so on. 

Other factors to consider during this step will vary in order to achieve your financial goals. For example, you might want to save more money by increasing contributions to your 401(k) or IRA accounts. There also could be investment opportunities with the potential to provide higher returns than what you currently earn through interest from savings accounts at banks like Chase Bank or Wells Fargo.

Step 5: Building a Budget

Lastly, a quality financial planner can help you finalize a streamlined budget. This may include helping you determine how much money you need to save for a specific retirement lifestyle goal, like buying a boat. Similarly, your financial planner could assist you in the creation of an estate plan (if one is not already in place) to help secure the financial legacy you leave for your loved ones.

Why Hire a Fee-Only Financial Planner?

Ohio High net worth investor flying in his private jet happy he has a comprehensive financial plan

The advantage of having a fee-only wealth manager is that they charge you directly for the services they provide. This helps reduce the likelihood of a conflict of interest. Conversely, if you choose an advisor who makes sales commissions off of clients’ purchases, that could potentially affect their advice and recommendations.

In other words, someone who pockets additional money for advocating a particular company’s stock may be less likely to offer objective asset allocation. They may be more professional-survival-minded than greedy, however: This sometimes happens because the larger company that owns the advisor’s firm also owns the company that just went public.

Regardless of the reason why, someone receiving commissions may recommend a product that’s more expensive than an alternative—but lower in terms of quality (or suitability for your personal goals). In contrast, when your advisor is compensated exclusively in fees, your costs can be more transparent. They may be easier to understand, allowing you to compare different offerings more easily, as well. 

Perhaps most importantly, if a candidate for becoming your financial advisor is both fee-only and a fiduciary, you have found a golden combination: Fiduciaries are legally obligated to put the financial interests of clients ahead of their own at all times; even if doing so would incur injury to their own personal financial interests. 

Again, the comprehensive financial planning process for affluent individuals and families is a critical aspect of managing your money. It is vital for this process to be executed with care by someone who will work closely to understand your goals. Just as importantly, you need someone with experience providing financial advice to clients of similar means. 

McGervey Wealth Management takes pride in meeting and exceeding these requirements through dependable white-glove service. Find out why some call us the best fiduciary financial planner Akron-Canton, OH has. Contact us today. 

More About the Author: Matthew McGervey, CFP®, MBA

As a CERTIFIED FINANCIAL PLANNER™ professional, Matthew has a broad knowledge of personal financial planning strategies and solutions.